FMCG sector recovering from downtrend, says Adi Godrej

The growth in FMCG sector is now witnessing a reverse trend after recording a decline for last couple of years, Godrej Group chairman Adi Godrej said here.

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"FMCG as a sector in India has pivoted over the last decade. Till about FY12, FMCG on an average used to grow ahead of GDP, while between FY13-16, the growth has lagged economic growth, At about $50 billion, serving nearly 1.2 billion people through over eight million outlets, the sector is large, Yet, FMCG value growth witnessed a continuous declining trend till recently- from 17 per cent in 2011 to eight per cent in 2017. Thankfully, the trend now seems to be reversing", Godrej, said at the Foundation Day Lecture of Xavier Institute of Management- Bhubaneswar.

He said that the overall macro economic outlook is positive and having turned a corner after transitionary negative impacts of demonetisation and GST (Goods and Service Tax) faded, India's GDP growth in FY19 is now estimated to be about 7.8 per cent.

"Although we are still riddled with several challenges on inflation, exchange rates, input prices etc. This makes India the fastest growing economy in world, ahead of China. FMCG too has seen a recovery in FY18 with sector growing at 13 per cent", added the patriarch of the 120-year-old Godrej Group.

While stating that the sector growth is strong, he cautioned that there have been several structural shifts in recent years and making the blueprint success for incumbents look quite different now as compared to a decade later.

Stressing that digital and e-commerce are democratizing the playing field, he said, “By 2020, nearly one third of FMCG and nearly two-third of beauty and hygiene space is expected to be digitally 'influenced' which implies that online channels become critical to influence consumer purchase decisions."

He stated at, thfor FMCG, a lot of the innovation in India will create value for money and increasing penetration of under penetrated categories.

"A large section of FMCG market is still dominated by unbranded goods. These innovations will help consumers upgrade from unbranded to branded products", he added.

At Godrej Consumer Products, new product development including renovation, contributes about 35 to 40 per cent of its total revenues.

Over the last few years, we have accelerated our efforts on innovation by dedicating resources and putting structured processes and systems behind it, Godrej said.

Keeping high expectations from the government from the upcoming budget for the consumer goods industry, he hoped that it (budget) should be a growth oriented budget.

“It is good to see that government is planning a full budget 2019 and not a vote-on-account ahead of the election", he added.

Godrej was conferred honorary doctorate in management by Xavier University Bhubaneswar, the first such degree conferred by the varsity since its inception in 2013.